JUNEAU — Eligible Alaskans would receive a $1,000 Permanent Fund dividend later this year under a proposal approved Tuesday by the Alaska Senate Finance Committee.
That amount could be changed Wednesday when the proposal — and the rest of Alaska’s annual budget — is heard by the full Alaska Senate.
“I think it might go up,” said Senate Majority Leader Shelley Hughes, R-Palmer.
Other lawmakers, including finance committee members Bert Stedman, R-Sitka and Bill Wielechowski, D-Anchorage, said they don’t know what to expect.
“As a non-binding caucus, Senate Majority members are free to vote their conscience,” said Senate President Peter Micciche, R-Soldotna.
“The result will become quite clear on Wednesday,” he said.
The Senate’s dividend amount is critical because it represents an upper limit.
Last month, the state House approved a budget bill that does not include a Permanent Fund dividend. When negotiators begin to discuss a compromise between the House and Senate versions of the dividend, they must choose the Senate version, the House version, or something in between. Gov. Mike Dunleavy can veto money from the budget; he cannot add money.
The Senate is closely divided between senators who want a dividend paid using a formula written in the 1980s and those who say the dividend needs to be set at an amount that doesn’t overspend from the Alaska Permanent Fund.
The state is forecasting about $4.7 billion in revenue during the fiscal year that begins July 1. That excludes federal money and fee-based revenue from things like hunting permits and university tuition.
Without the dividend, the Senate budget includes $4.78 billion in expenses, excluding those covered by federal money and fees.
A $1,000 dividend adds $674.9 million in expenses. The traditional dividend would cost about $2.2 billion.
The state has about $600 million in safely spendable savings, budget experts said on Tuesday. Lawmakers could also pay for some state-funded programs using federal economic aid, freeing more money for the dividend, though both options have consequences.
“The amount of (money) to pay a $1,000 check takes almost every dollar available,” said Sen. Natasha von Imhof, R-Anchorage. “The consequence of that is we end up not having as much money to invest in our economy.”
As third option, legislators could also blow through a 2018 limit on spending from the Alaska Permanent Fund. A prominent Juneau attorney, Joe Geldhof, told legislators that if they choose that route, he will sue to enforce the 2018 limit.
“I hope he’s got a good case,” said Stedman, who proposed the $1,000 dividend and opposes larger amounts.
Wielechowski supports the larger amount and has repeatedly defended the traditional dividend formula. On Tuesday, he proposed amending the budget to include the bigger dividend, but that was defeated, 4-3.
The key vote came from Sen. Lyman Hoffman, D-Bethel, who said he supports a constitutional amendment changing the dividend formula and guaranteeing payments.
He said he doesn’t support a large amount until there is a long-term fix.
“I believe the dividend should be no greater than $1,000,” he said.